Death by Taxes

 

“I like to pay taxes. With them, I buy civilization.” ~ Oliver Wendell Holmes Jr.

“We don’t pay taxes. Only the little people pay taxes.” ~ Leona Helmsley

That’s two ways of looking at things. Holmes was that Supreme Court Justice appointed by Theodore Roosevelt, the trust-busting progressive Republican president, in 1902, who served on the court through 1932, being witty, and at the end, writing the opinions that saved FDR’s New Deal and the SEC and all the new regulations that saved capitalism from itself for a time. He thought government could be useful, as a tool to civilize us and keep the greedy crazies in check, the amoral predators that would undermine civilization just to make a buck. That’s worth paying for. Everyone should chip in – but he was also a fierce advocate for free speech and freedom of the press. If you wanted to bitch about how government is always the problem and never the solution, knock yourself out. It’s a free country. He, however, preferred civilization. Taxes made a well-ordered prosperous and fair and pleasant society possible. How else are you going to pay for police and firemen and schools and libraries, and roads and bridges to keep things humming along, and an army to keep us safe? People needed to understand that.

Leona Helmsley was that Manhattan real estate developer from the sixties – the Queen of Mean who did massive conversions in the city, turning ordinary apartments into expensive condominiums everywhere, which is why few can afford to live there now, along with developing a string of ultra-luxury hotels. Those provided the very best for those who could afford the very best. She was Donald Trump before there was Donald Trump, and she too stiffed her contractors and laughed at them – and she also bragged about not paying taxes, because she was rich enough to hire lawyers to take care of that nonsense. “Little” people can’t do that, but that’s their problem, not hers. In 1989 she was convicted of tax evasion and sent to prison. Civilization struck back. Such people are a threat to it. We’re all in this together. Everyone chips in. The rich don’t get a free pass – but she regretted nothing. Like Donald Trump, she forced the riff-raff out of the city. Neither put it that way, but that was the net effect.

All of that is ancient history now, except that it’s all playing out again. Hillary Clinton is channeling Justice Holmes and Donald Trump is doing that Leona Helmsley thing:

Rudy Giuliani called Donald Trump a “genius” Sunday, in the wake of a New York Times report indicating he may have legally avoiding paying taxes for nearly two decades.

“The reality is, this is part of our tax code. The man’s a genius. He knows how to operate the tax code to the benefit of the people he’s serving,” the former New York City mayor told CNN’s Jake Tapper on “State of the Union.”

Throughout the contentious interview, Tapper repeatedly pressed Giuliani on his claims that Trump was a “genius” and a good businessman based on The New York Times reporting.

“I think that there are a lot of very, very successful businessmen and women who pay federal income taxes and don’t look for every single opportunity there is to avoid paying them,” Tapper said at one point.

That’s another way of saying that they’re not like those “little” people, of course, but the problem is this:

The New York Times reported Saturday that Trump reported a loss of $916 million on his 1995 tax records – which, tax experts said, would have allowed Trump to avoid paying income taxes for a period of 18 years.

The paper did not look at his federal return. It obtained one page of his New York State resident income tax return as well as the first page of New Jersey and Connecticut nonresident returns.

Trump’s campaign is pretty pissed off, but they haven’t challenged any of the facts reported by the Times, and they’ll be damned if they release any of Trump’s actual tax returns – he’s under audit. There are no legal restrictions against releasing tax returns that are under audit, but they say that doesn’t matter – they’ve been advised, internally, not to release them. Perhaps little people wouldn’t understand them, but Rudy says those little people should understand what they just saw:

“It shows what a genius he is. It shows he was able to preserve his enterprise and that he was able to build it,” Giuliani said.

He insisted Trump isn’t to blame for failing to pay federal income taxes.

“No. The law is responsible for it,” Giuliani said. “If you have a set of laws, you live by those laws. And the reality is, you are ignoring completely the fiduciary obligation he has to all the people around him to run his business at the lowest possible expense.”

That wasn’t good enough for the Justice Holmes crowd:

Senate Democratic Leader Harry Reid, who has kept up a drumbeat of Trump attacks over his taxes, said Sunday, “Trump is a billion-dollar loser who won’t release his taxes because they’ll expose him as a spoiled, rich brat who lost the millions he inherited from his father.”

“Despite losing a billion dollars, Trump wants to reward himself with more tax breaks on inherited wealth while stiffing middle-class families who earn their paychecks with hard work,” Reid said.

And so it goes:

Tapper pressed Giuliani on whether someone who lost $916 billion in one year could reasonably argue he’s a good businessman.

“That doesn’t sound brilliant,” Tapper said.

“Well, yes it does, because he came back,” Giuliani said. “Because he came back, and he came all the way back. And isn’t that the history of America? I mean, people like Steve Jobs were fired by Apple and came all the way back. Churchill was thrown out of office twice and came all the way back.”

Another top Trump ally, New Jersey Gov. Chris Christie also called The New York Times’ report positive for Trump because, he said, it shows his resiliency.

Okay, Trump is a resilient genius. America was being told little people don’t understand that, and also being told this:

Donald Trump surrogate Rudy Giuliani on Sunday suggested that a man such as Donald Trump would be a better president “than a woman.”

“Don’t you think a man who has this kind of economic genius is a lot better for the United States than a woman, and the only thing she’s ever produced is a lot of work for the FBI checking out her emails,” the former New York City mayor said on ABC’s “This Week” with George Stephanopoulos.

Giuliani isn’t helping here. Leona Helmsley was a woman. Daniel Politi, however, lays out Trump’s real problems here:

Clinton appears to have been right. Trump was trying to hide something “terrible.” During Monday’s debate, Hillary Clinton went through several reasons why Trump may be refusing to release his tax returns. Whatever the reason, she concluded, it must be really bad. “And I think probably he’s not all that enthusiastic about having the rest of our country see what the real reasons are, because it must be something really important, even terrible, that he’s trying to hide,” Clinton said. The Times story fits right into this narrative.

Then there’s this:

A big part of Trump’s narrative of why he should be president is that he’s a great businessman who has managed to make lots of money throughout the years. He has vowed to transfer those business smarts to the White House. But the tax returns revealed by the Times that shows he lost almost $1 billion in one year lends credence to those who have said Trump is not as successful as he claims to be and how his business dealings have hurt a lot of people along the way. The Clinton campaign has already seized on this a bit in its first press release after the Times story was released, saying the piece “reveals the colossal nature of Donald Trump’s past business failures.” Clinton could take this idea further and get under Trump’s skin by calling him a failed businessman at the next debate, which we all know he hates. As Slate’s Jacob Brogan wrote on Twitter: “Trump said he didn’t pay taxes because he’s ‘smart’. It turns out he didn’t pay taxes because he’s one of the worst businessmen in history.”

Then there’s this line of attack:

Part of Trump’s appeal has always been that he knows Washington insiders have an unfair advantage over the little guy who always ends up getting the short end of the stick. But the Times story suggests Trump is one of those bigshots who knows how to game the system for his own personal benefit. Tax experts can very well argue (as they do) that none of what Trump did was illegal but that would seem to matter little when Clinton can make the argument that a man claiming to be one of the wealthiest businessmen in the planet didn’t pay any income tax while working families struggling to make ends meet had to pay up.

And then there’s this odd detail:

Hidden inside the Times story is a little gem about something the three pages of Trump’s 1995 tax returns showed: “Mr. Trump declined the opportunity to contribute to the New Jersey Vietnam Veterans’ Memorial Fund, the New Jersey Wildlife Conservation Fund or the Children’s Trust Fund. He also declined to contribute $1 toward public financing of New Jersey’s elections for governor.” The Times didn’t analyze the candidate’s federal tax returns it’s impossible to know how much he donated to charity that year. But his failure to donate to these charities helps Clinton make the case that Trump only watched out for himself.

This, then, may be a story with legs:

Trump’s failures to release his tax returns have hung over his campaign for months. Now, attention on the issue will only intensify. And not just on how he’s the only candidate in 40 years to refuse to release his returns, but also on how he has flip-flopped on the issue. After all, during the primaries he had vowed to eventually release his returns only to back off that promise later. Trump has said he can’t release his returns because he is being audited, but everyone has called him out on that as just plainly false. Expect to hear a lot more about this in the coming weeks.

And then look back:

Context is everything. Maybe Trump could have brushed off this latest bit of news if it weren’t for the fact that it comes at the end of what some are calling the worst week of any presidential campaign in recent memory. It all began with Trump’s terrible performance in the first presidential debate and then continued with him trying to justify the way he treated a former Miss Universe and a 3 a.m. tweetstorm that had a presidential candidate urging voters to check out a “sex tape.” And that’s without mentioning other potentially devastating news that came out this week, such as Newsweek’s revelation that Trump had illegal dealings with Cuba.

Then add that he was ripped to shreds on Saturday Night Live – it was a bad week that ended with the tax story.

Trump does not take these things well:

The New York Times posted its piece on how Donald Trump may not have paid federal income taxes for 18 years just as the Republican presidential candidate took the stage for a rally in Manheim, Pennsylvania. Trump was 102 minutes late to getting the rally started and once he did, the candidate just seemed to find it impossible to stick to the script. Throughout his speech, Trump went off topic several times to lob what may very well be some of the wildest accusations against Hillary Clinton and the American election process in general. And there were also some head-scratching tangents about how Hollywood doesn’t make good movies anymore and praise for the success of the Apprentice.

No, really:

For the second day in a row, Trump told a mostly white audience that they need to monitor polls in “certain” areas because voter fraud is a really big deal and could cost him the election. “You’ve got to go out, and you’ve got to get your friends, and you’ve got to get everybody you know, and you gotta watch the polling booths, because I hear too many stories about Pennsylvania, certain areas,” Trump said during the speech. “I hear too many bad stories, and we can’t lose an election because of you know what I’m talking about. So, go and vote and then go check out areas because a lot of bad things happen, and we don’t want to lose for that reason.” The warnings over voter fraud are particularly concerning considering they come shortly after Trump suggested he may not accept the results of the election if Clinton wins.

There’s that, and the thought of Trump folks showing up at “black” polling places fully armed, in open-carry states, and eyeing everyone who enters, with their fingers on the trigger. Still, scare off enough of those people and you win. That’s a bit nasty, but would probably be fairly effective, in a third-world kind of way – unless those voters bring guns too. Then things would turn interesting.

There was some logic to that, but this was just odd:

At one point, Trump said Clinton did the bidding of her donors and gave away jobs of Pennsylvanians but people probably don’t realize it, and, hey aren’t movies awful these days? “You’re unsuspecting,” Trump said. “Right now, you say to your wife: ‘Let’s go to a movie after Trump.’ But you won’t do that because you’ll be so high and so excited that no movie is going to satisfy you. Okay? No movie. You know why? Honestly? Because they don’t make movies like they used to – is that right?”

That seemed to be the perfect moment for Trump to talk about another aspect of the entertainment industry: himself. “Oh, I could be doing the Apprentice right now,” Trump said. “I loved it – 14 seasons. How good was that? Tremendous success. They wanted to extend – I could be doing the Apprentice now. Somehow I think this is a little bit more important. Do we agree? Just a little bit?”

Go ahead. Try to make sense of that. It appeared he was losing it, and projecting:

The Republican presidential candidate directly attacked his opponent several times during the speech saying at one point that “she has bad temperament, she could actually be crazy.” He then went on to imply that the former secretary of State had likely been unfaithful to her husband. “Hillary Clinton’s only loyalty is to her financial contributors and to herself … I don’t even think she’s loyal to Bill, if you want to know the truth,” Trump said. “And really, folks, really, why should she be? Right? Why should she be?”

Hillary could actually be crazy? That’s projecting, and there was this:

Trump also for some reason thought it’d be a good idea to impersonate how Clinton stumbled because of her pneumonia on September 11. “Here’s a woman, she’s supposed to fight all of these different things, and she can’t make it 15 feet to her car,” Trump said. “Give me a break.” Trump also seemed to veer off script when he brought up Clinton’s use of a private email server. “She should be in prison, let me tell you,” Trump said. “She should be in prison.” The crowd went wild with that one and began chanting: “Lock her up! Lock her up! Lock her up!”

Who should be locked up here? What’s left for Saturday Night Live to mock? That’s the real danger here. This tax story may not actually go very far – the tax code is complex and Trump really did do nothing at all illegal – but it set him off. He lashed out, incoherently, as he does when he feels threatened by anything at all. He may end up blaming Rosie O’Donnell for it all. She’s a fat, ugly pig, isn’t she? All bets are off now. His reaction to the tax story may sink him, not the story itself.

Steve M. at No More Mister Nice Blog puts that this way:

What’s going to matter between now and November? I don’t think it’s going to be Trump’s taxes. Too many Americans in the post-Reagan era are still active members of the Church of the Businessman – they think “job creators” are wonderful people and they’re certain Trump is a great businessman because TV said so for 14 years.

I think Trump’s mental state is going to matter much more. He’s out of control. He thinks whatever makes him feel good is good for his campaign. And I really think he might be on drugs – I know everyone says he never touches drugs or alcohol, but we heard the same thing about Prince.

I think he’s only going to get worse in the next few weeks. I think he’s going to be like this in the two upcoming debates. It’s going to be amazing to watch.

It will be his death by taxes, and Josh Marshall puts that in perspective:

In itself the revelation is somewhere between very damaging and catastrophic. But that is almost a secondary question. The real issue is this: at the moment Donald Trump is clearly behind and there are little more than 30 days before the election. He needs a decisive shift in the race and he has very little time to accomplish that. Regardless of its specific impact, the tax story will probably take at least a week for the campaigns and the press to litigate. And that’s a week Trump simply doesn’t have to spare. In football terms it’s like being down two touchdowns with only two or three minutes to go and you turn the ball over to the other team. If they score, it’s fatal. But even if they don’t it’s almost as bad because they’ll run down time you don’t have.

Others say, “Well, it doesn’t matter. His supporters won’t care.” No, they probably won’t. But that’s not relevant. His supporters make up less than 40% of the electorate. Alone they get Trump a shattering defeat in Goldwater/Mondale territory.

Right now Trump needs to hold wavering anti-Trump (but more anti-Hillary) Republicans and make serious gains with loosely-affiliated voters in swing demographics like suburban, married white women, college educated whites of both genders, etc. Saying he’s ‘smart’ not to pay any taxes gives feral Trumpers something to yell about. It has very little traction outside the committed Trump camp.

Leona Helmsley might have had her fans, someone who thought she was a genius too, but not enough people liked her either. Most people grudgingly accept Holmes’ dictum, that with their taxes they’re buying at least basic civilization – a place to live that’s relatively safe and where everything works, more or less. Those who don’t accept that premise don’t belong here. Leona Helmsley was sent off to jail. Donald Trump will be sent back to Trump Tower, where he can tweet about Rosie O’Donnell all he wants, and think bitter thoughts, and maybe it will finally sink in. There are no little people.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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One Response to Death by Taxes

  1. Rick says:

    Could this New York Times tax returns story be the “October Surprise” we’ve all been waiting for? I don’t get the feeling it is. Maybe it’s that it’s too early in the month for that, but something just doesn’t feel right about it.

    In fact, I’m wondering if the real October Surprise will come along when Donald Trump confesses that he himself mailed doctored phony documents to the Times, just to catch them in a trap, just to expose how gullible the lying press is, so anxious to embarrass Trump that they’d jump on anything juicy that appears over the transom. His ex-accountant could even be in on it.

    But in the meantime, let’s assume the documents are real, in which case, Trump’s not looking like the genius he and his gang of thugs think he is.

    My point is that, while Donald Trump was looking out for, shall we call it, his big fat “bottom line”, I and lots of my fellow Americans were shelling out many of our dollars to keep the country going. A lot of people dont realize it but even undocumented immigrants pay federal and state income taxes, which means the people he wants to throw out of the country have been doing more for it than he has.

    While he might argue that he has been paying all his workers and keeping the economy churning, but for all that, so do drug kingpins. And just possibly drug dealers actually don’t cheat their workers out of their hard-earned pay like Donald famously does.

    Another favorite comeback of Trump’s is that the “government doesn’t spend its money well anyway”, but the answer to that is that one might think Donald Trump would have earned his right to complain about the way the government spends our money if any of it came from him.

    And if the point he’s trying to make to his not-so-wealthy political base is that, while he may be a hugely wealthy shit-head, at least he’ll be a shit-head on their behalf, then the real question seems to be, when and if he becomes president, is there any evidence that he will work to change the law, making it no longer possible for extremely rich guys like him to get away with paying no taxes in this way?

    Here’s Chris Christie, yesterday, from Salon:

    Chris Christie said, “this is actually a very, very good story for Donald Trump.” The New Jersey governor practiced some of his best spinning on “Fox News Sunday,” arguing that the Times story showcases “the genius of Donald Trump” because he knows tax policy better than anyone.

    “And that’s why Donald Trump is the person best positioned to fix it,” Christie said. “There’s no one who’s shown more genius in their way to maneuver about the tax code as he rightfully used the laws to do that. And he’s already promised in his tax plan to change many of these special interest loopholes and get rid of them so you don’t have this kind of situation.”

    That sounds good, except that I’ve not been able to find any evidence of him actually proposing to do that in his tax plan, which he has already released. If I missed it in there, please let me know, but I’ve heard nobody else can find it either.

    On the other hand, even the conservative Tax Foundation has predicted that, while his present tax plan “would significantly reduce income taxes and corporate taxes, and eliminate the estate tax”, it would also “reduce federal revenue by between $4.4 trillion and $5.9 trillion on a static basis.”

    Is that good? Only if you don’t want the government to have enough money to pay for what it needs to pay for, or if you don’t mind the country increasing its debt by up to six trillion (that’s “trillion”, with a “t”) dollars. Trump always complains about the size of our debt as it is.

    And by the way, maybe any comparison of Trump’s business dealings to that of Leona “The Queen of Mean” Helmsley is even more appropriate than immediately apparent, at least from glancing at her entry on Wikipedia:

    Despite the Helmsleys’ tremendous wealth (net worth over a billion dollars), they were known for disputing payments to contractors and vendors. One of these disputes would prove to be their undoing.

    In 1983, the Helmsleys bought Dunnellen Hall, a 21-room mansion in Greenwich, Connecticut, to use as a weekend retreat. The property cost $11 million, but the Helmsleys wanted to make it even more luxurious. The work included a $1 million dance floor, a silver clock and a mahogany card table.

    The remodeling bills came to $8 million, which the Helmsleys were loath to pay.

    Sound familiar?

    A group of contractors sued the Helmsleys for non-payment; they eventually paid off most of the debt.

    In 1985, during those proceedings, the contractors revealed that most of their work was being illegally billed to the Helmsleys’ hotels as business expenses. The contractors sent a stack of the falsified invoices to the New York Post to prove that the Helmsleys were trying to avoid tax liabilities. The resulting Post story led to a federal criminal investigation.

    Also, Jeremiah McCarthy, the Helmsleys’ executive engineer, alleged that Leona repeatedly demanded that he sign invoices to bill personal expenses to the Helmsley company and, when McCarthy declined to do so, Helmsley exploded with tyrannical outbursts, shouting, “You’re not my fucking partner! You’ll sign what I tell you to sign.”

    But then there’s this interesting little tidbit:

    In 1988, then United States Attorney Rudy Giuliani indicted the Helmsleys and two of their associates on several tax-related charges, as well as extortion.

    I guess he’s glad he’s no longer in the prosecuting business; otherwise, he might have to indict one of his closest friends.

    Anyway, her husband was let off because of failing health, but she was eventually convicted on “one count of conspiracy to defraud the United States, three counts of tax evasion, three counts of filing false personal tax returns, sixteen counts of assisting in the filing of false corporate and partnership tax returns, and ten counts of mail fraud.” The extortion charge was dropped.

    She was sentenced to 16 years, but her appeals lawyer, Alan Dershowitz, eventually got that reduced, and she was released after serving only 19 months.

    She was forced to give up control of her hotel empire, since most of her hotels had bars and New York does not allow convicted felons to hold alcohol licenses. Mrs. Helmsley lived her final year at her penthouse atop the Park Lane Hotel.

    She left a $12 million trust fund for “Trouble”, her Maltese dog, but that was later reduced to $2 million, “as excessive to fulfill its purpose.” I don’t know if Donald has pets, but I can just about see all that other stuff happening to him.

    And so we’ll just have to wait and see if this new story in the news about Trump being a cad will make any difference to his support. Even if the staunchest Trumpeters won’t be able to make any sense of it, maybe it will be just enough to keep independents from swinging in his direction.

    And do you remember that school dance scene in “Back to the Future”, in which Marty (Michael J. Fox) watches as his family fades away in the family photo, and out of his future, as his teenaged mom and dad fail to hook up on the dance floor? I’m reminded of that every time I look at 538.com and see Hillary’s chances dropping.

    But then I see his family fading back into the photo whenever I go there on days like today, and see her fortunes improving — pushing 70%! — seemingly in response to this Times story, but it probably wouldn’t happen that quickly.

    Maybe it’s just because America is coming to its senses anyway, the closer we get to the crucial day.

    Rick

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